Gold Falls on GDP, Trimming Biggest Weekly Gain in 15 Months

By Debarati Roy -
Apr 26, 2013

Gold futures fell, trimming the
biggest weekly gain in 15 months, as the U.S. economy expanded
less than forecast, driving commodities lower and crimping
demand for the precious metal as a hedge against inflation.

Gross domestic product rose at a 2.5 percent annual rate,
Commerce Department figures showed today. The median estimate of
86 economists surveyed by Bloomberg called for a 3 percent gain.
This week, gold jumped 4.2 percent, the most since late January
2012, as demand for coins, bars and jewelry surged following
last week’s plunge in futures. The Standard & Poor’s GSCI index
of 24 raw materials slumped as much as 1.1 percent, led by
industrial metals.

“Inflation is one thing you do not have to worry about if
the world’s largest economy is struggling and instead the
concern should be deflation,” Michael Gayed, the chief
investment strategist at New York-based Pension Partners LLC,
which advises on $190 million in assets, said in a telephone
interview. “And when you have a rally like the one we saw in
gold, there is bound to be some profit-taking.”

Gold futures for June delivery declined 0.6 percent to
settle at $1,453.60 an ounce at 1:38 p.m. on the Comex in New
York. Prices earlier rose as much as 1.6 percent, mainly on
increased physical buying.

On April 15, futures plummeted 9.3 percent, the most in 33
years. On the following day, the price touched $1,321.50, the
lowest in 26 months. Since then, the metal has climbed 10
percent.

Assets Cut

In China, gold buyers were hoarding the metal and demand is
“strong” in Dubai, Bernard Sin, the head of currency and metal
trading at bullion refiner MKS (Switzerland) SA in Geneva, said
by e-mail today.